Financial regulations. (Photo: Shutterstock).
The Financial Accounting Standards Board agreed Wednesday to delay the effective date for the controversial Current Expected Credit Loss (CECL) standard an additional year—until January 2023—for credit unions.
Credit union trade groups have vehemently argued that they should not be subject to CECL at all.
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Under the CECL standard, institutions will have to recognize the expected lifetime losses at the time a loan or financial instrument is recorded.
Credit union trade groups said the proposal does not go far enough.
"We appreciate FASB considering credit unions' concerns and moving forward with a delay of the CECL standard and committing itself to conducting a cost-benefit analysis to better understand this new standard's impact on consumers, credit unions and the economy as a whole," said NAFCU Chief Economist and Vice President of Research Curt Long.
Long said NAFCU will continue to press for credit unions to be exempt from the standard, saying that "credit unions did not cause or contribute to the financial crisis or the poor lending conditions that led the FASB to consider a new standard."
CUNA officials agreed.
"While the proposed one-year delay will help small credit unions come into compliance with this rule, the fact remains that CECL is a solution in search of a problem," said Elizabeth Eurgubian, CUNA's deputy chief advocacy officer and senior counsel. "We maintain that CECL will only hinder credit unions' ability to uplift low-income borrowers and maintain that a quantitative impact study is critical to understand the far-reaching effects of CECL, including its impact on credit availability."
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